The local film industry will soon benefit from new tax exemptions, now proposed by the culture and tourism ministry, to help local film production.
Minister Jero Wacik told reporters at the Indonesian Creative Products Week on Friday that he had received verbal approval on help for the local film industry from finance minister Sri Mulyani Indrawati.
"We've presented her with our ministry's proposal to free the film producers from the tax. During the discussion she has agreed to approve it and we're currently waiting for her to issue an instruction letter on that," Jero said.
The tax exemption is part of the government's efforts to strengthen the creative industries, spearheaded by Trade Minister Mari Elka Pangestu since 2006.
Apart from providing fiscal incentives, the government plans to provide a copyright protection framework and financial incentives to help encourage creative businesses.
The creative industries comprise 14 areas; music and musical instruments, advertising, architecture, handicrafts and art festivals, antiques, design, fashion, film, video and photography, interactive games, performing arts, printing and publishing, computer services and software and radio and television.
Mari said the creative industries would achieve the target of an 11 percent contribution to the country's gross domestic product (GDP) by 2025 from about 8 percent now.
The tax exemption news was welcomed by industry players.
"I think it's a big step, the government will exempt film producers from pajak tontonan *cinema tax*. Although it's less than what we've expected, it's good news. It will help us develop our local film industry," said Raam Jethmal Punjabi, owner and chief executive officer of film maker PT Tripar Multivision Plus.
Raam said exemption would end the 20 percent tax on cinema tickets.
Three years ago, the government decided to exempt local film producers from import taxes on film materials such as film negatives and cameras for film-making.
"We're now expecting the government to do more in order that we can develop our local film industry to meet people's expectations."
What the industry expect the most, Raam said, was for the government and the House of Representatives (DPR) to agree on the setting up a state owned national film financing corporation.
Raam said the main function of the corporation would be to secure financing for the local film industry, especially for films that might require big budgets, or would be in the national and public interest.
"Although this corporation will be a state firm, it should be an independent body managed by professionals," Raam told The Jakarta Post.
With all these beneficial tax benefits being proposed, Jero said local film producers should be able to improve productivity and quality.
"With the *new concession on the cinema tax*, the local film industry should be in a better condition to develop their products," he said.
This benefit, he said, would not be extended to foreign film producers.
"If necessary, the government will impose import taxes as high as possible for the foreign films," he said.